Whistleblowers and Disclosure of Confidential Information

Employees have an obligation to keep the information of their employers’ secret during the course of their employment contract. The law of confidential information protects information that has a ‘necessary quality of confidence about it’ when the information was imparted to a confidant and the confidant had, or reasonably ought to have known that they were under an obligation to keep the information secret. The confider is able to prevent the confidant from disclosing the information in a manner that is contrary to the purposes for which it was disclosed. The law is based on a principle of public policy that business and private affairs ought to be preserved. There are exceptions to obligation to keep information confidential and the public interest defence may be available to whistleblowers where disclosures are made.

The obligation of confidence may arise by virtue of a contract that imposes duties of confidence, or by the circumstances. In employment contracts, employees are under a fiduciary duty to their employers, which imports (or implies) an obligation on their part to refrain from disclosing employers’ business to third parties without consent. Where does this leave employees then, when some conduct comes to their attention that should be disclosed?

Basis of a Defence for Whistleblowers

In Gartside v Outram (1856) 26 LJ Ch 114, the Court held that confidences that concern an ‘iniquity’ should not be afforded the protection of the law, thus courts will decline an application where the obligation of confidence may be considered to involve such information. The Shorter Oxford Dictionary defines an iniquity in the following terms, “Immoral, unrighteous, or harmful action or conduct; gross injustice, wickedness, sin. Also, the quality of being wicked or sinful; Wrongful acts; sins, injuries, injustices”. In that case, an employee was held to be under a positive obligation to disclose to the public the fraudulent practices of their employer.

Whistleblowers and the Public Interest Defence

This is known as the public interest defence, and has been applied to information held by government instrumentalities, businesses and individuals’ private affairs. The defence sets aside the duty of retain the confidence whether the duty arises under a contract of employment or implied by the circumstances of the disclosure to the confidant.

In modern law, the test is applied by deciding whether the public interest is greater served by keeping the information secret or in its disclosure. It was said in Initial Services v Putterill [1968] 1 QB 396, that applied to ‘any misconduct of such a nature that it ought in the public interest to be disclosed to others, including crimes, frauds, misdeeds, both those actually committed and those in contemplation.’ Thus the defence for whistleblowers would apply in the event that some breach of the law or misbehaviour would or would likely be committed.

The question to be answered by the defendant is whether there existed ‘a just cause or excuse’ for the disclosure in order for the defence to apply.

Importantly, the Court of Appeal held in Lion Laboratories Ltd v Evans that there is no requirement to show that there was actual wrongdoing to raise the public interest defence. The defence applied there was a legitimate basis that it is in the public interest for the information to be disclosed. In making this ruling the availability of the defence was widened, as the requirement for an iniquity which was introduced by Gartram v Outram and subsequently revised in Initial Services v Putterill was no longer necessary for the defence to apply.

Balancing Exercise

Assessing whether the public interest defence will be available is a balancing exercise, whilst having regard for the Human Rights Act, for the court to determine whether disclosure or maintenance of the confidentiality is in the public interest. The public interest in maintaining confidentiality may outweigh that of disclosure. The burden of proof lies with the defendant.

Factors that are likely to be taken into account in the balancing exercise are the nature of the misbehaviour or iniquity and the degree of harm likely to come to the public by maintaining confidentiality. Some attempt should be made to test the veracity of the evidence intended to be disclosed and there should be a reasonable likelihood that the information is true.

In Closing

Disclosing what would ordinarily be considered the confidential information of employers or government instrumentalities is a serious business. Employers invest time, money and labour into creating an advantage in the market, and the Whistleblowers’ Defence exists to protect the safety of the public. Whistleblowers should think carefully and preferably take advice for an independent, objective and balanced view before taking action, probably in all but the most serious and urgent cases. Consideration should also be given to the Official Secrets Act, which is a legislative regime that looks to supersede the general law of confidentiality, as criminal penalties apply. As a discretionary remedy, enforcing an obligation not to disclose, allows a court to recognise the obligation of confidence and at the same time refuse to enforce it on public policy grounds.